Wednesday, May 30, 2012

Do one thing and do it well

Excerpts from the book, Hedge Fund Market Wizards:

Schwager:  You have seen a lot of traders.  What are the characteristics of traders who succeed?

Clark: They all work hard. Nearly all the successful traders I know are one-trick ponies.  They do one thing, and they do it very well.  When they stray from that single focus, it often ends in disaster.  In the hedge fund world, you will see traders who do one thing very well, make a lot of money at it, and then think, This one thing is very boring. I can do other things because I am a genius. So they start doing other things.  You had a number of great macro traders decide to branch into multistrategy funds.  It didn’t work too well in 2008 when they were all exposed.  One well-known macro trader wrote to his investors in 2008 that he had made them money, but it was the other managers in the fund, trading an assortment of strategies, who lost all the money.


Jitender Yadav said...

Respected Sir
It is in reply to Rajat's comment-Nobody wants to lose money to check ego brother. It's just that after a winning streak a novice like me becomes overconfident and starts to think that he can profit in every instrument but loses money in them for his lack of knowledge,skills and experience.It's Market (strict teacher) way of telling to the novice that you need to learn a lot.
For master traders like Sudarshan Ji, those occasional losses are the market's way of making the game challenging and therefore interesting.
Your Fan
Jitender Yadav
New Delhi

sanraj said...

That was a very interesting perspective . Thanks! In nut shell, 'be focused' is the keyword here